Making Tax Digital for Income Tax: who is in, and when

Making Tax Digital (MTD) for Income Tax changes how sole traders and landlords report to HMRC. Instead of one return a year, you keep digital records, send a short summary every quarter and then file your tax return as usual. Whether it applies to you depends on your qualifying income: your total income before expenses from self-employment and property, taken from the tax return two years earlier.

Income from employment, pensions and your share of a partnership’s profit does not count. Partnerships themselves are not in yet; HMRC will set out their timetable later. HMRC writes to people it expects to join, but if no letter arrives it is still your responsibility to check.

What you send, and when

Each quarterly update is a summary of income and expenses taken from records kept in compatible software. Your tax return is still due by 31 January after the tax year ends, and the dates for paying tax do not change.

Penalties, and a year to settle in

Late quarterly updates do not earn penalty points in 2026/27. After that, each missed deadline earns a point, and four points bring a £200 penalty. Budget 2026 confirmed the same easement for everyone joining in April 2027: no penalty points for late quarterly updates in 2027-28.

What to do now

• Add up your 2025/26 self-employment and property income: above £30,000, you join from April 2027.
• Move your records into MTD-compatible software before the tax year begins.
• Keep business and personal spending apart, so each update takes minutes rather than days.